Discussion Paper

Why Cash Transfers Are Good Policy in the COVID-19 Pandemic

Abstract: The COVID-19 pandemic has had an exceptionally large and negative impact on economic activity around the world. We show that cash transfers can be a useful policy tool during a pandemic. Cash transfers mitigate consumption inequality induced by the pandemic and provide incentives to individuals who are most negatively affected by lockdown policies to adhere to them.

Keywords: COVID-19 pandemic; cash transfers; stimulus payments; inequality;

JEL Classification: E21; E62; H84;


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Bibliographic Information

Provider: Federal Reserve Bank of Atlanta

Part of Series: Policy Hub

Publication Date: 2020-05-14

Number: 2020-4